Which of the Following Is Not Considered to Be a Basic

question 49

Multiple Choice

Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?

• A) expectations theory
• B) loanable funds theory
• C) liquidity premium theory
• D) market segmentation theory

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Definitions:

Orders to Pay

Instructions typically issued by a debtor authorizing their bank to pay a specified amount of money to a creditor on a certain date.

Certificate of Deposit

A Certificate of Deposit is a financial product offered by banks that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Bank

A financial institution licensed to receive deposits, offer loans, and provide various financial services to its customers.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.